“2017 was another landmark year for Aeroflot, as the Group’s airlines carried 50.1 million passengers, 15.4% more than the previous year. We took full advantage of the opportunities offered by the growing passenger transportation market in both the scheduled and charter segments. The Group continued its sustainable growth on domestic and international routes. The Group utilised its significant capacity additions – up 14.2% year-on-year – efficiently, resulting in an increased load factor of 82.8%, 1.4 p.p. higher than in 2016. This is a particularly notable achievement given our already high load factor, which has now increased for three years in a row, adding a total of 5.1 p.p.

“The financial results for the year reflect a normalisation of profitability and the effect of a number of market factors that had already had an impact on our 9M 2017 results. Yields came under pressure from a changing competitive landscape and international carriers adding capacity back into the Russian market, while the re-opening of the Turkish market led to structural changes in demand. On the other hand, higher oil prices and the change in ruble and currency correlation pattern rate put pressure on fuel costs, a key expense item accounting for 24.9% of operating costs. The key tools available to help us manage the impact of these macro factors are an efficient system for purchasing fuel on favourable conditions, as well as continued incremental improvements in fuel efficiency. In 2017 specific consumption was 22.8 g per seat-kilometre, a reduction of 0.6% year-on-year.

“The fourth quarter saw the continuation of some positive trends that first began to emerge in the third quarter. In Q4 2017 we were able to achieve an increase in the pace of revenue growth to 11.9%, compared to 7.5% for the year, as well as a slow-down in cost growth. EBITDA for the quarter reached RUB 2.7 billion, or 3.2 times more than the final quarter of 2016. The key factor here was increased yields, which also showed an improved trend during the period (year-on-year growth of 1% in the fourth quarter compared to a year-on-year decrease of 5% in 9M 2017).

“Given the impact of FX swings and higher fuel prices – as well as the lack of the material currency differences on returns of pre-payments for aircraft that affected the 2016 results – the financial result for 2017 was lower, reflecting the normalisation of profitability. In turn, the significant reduction of the debt burden thanks to pre-term repayment of credit lines during the year, as well as economies on other non-operational costs, supported net profit, which came in at RUB 23.1 billion.”